Tariff Trouble: How Canadian Investors Can Protect Their Portfolios

Canadian investors can protect themselves against Trump tariffs through diversification.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 18, 2025 8:45 pm EDT

| More on: CAR.UNHMRU

Trade tensions have once again taken centre stage, with recent developments casting a shadow over the economic landscape. On March 11, U.S. President Donald Trump announced his decision to double tariffs on Canadian steel and aluminum imports to 50%. This move, in retaliation for Ontario’s electricity surcharge on U.S. states, has exacerbated fears of a “Trumpcession,” thus leading to heavy losses on Wall Street and global markets. The S&P 500 fell by 0.75%, while the Dow Jones and Nasdaq also experienced declines. This escalation has worsened the already tense U.S.-Canada trade relationship, raising concerns about inflation, growth, and market confidence. Investors are now seeking strategies to protect their portfolios amidst this uncertainty.

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Protecting yourself

Understanding the implications of tariffs is crucial. Tariffs are taxes imposed on imported goods, making them more expensive. While they aim to protect domestic industries, they can lead to higher prices for consumers and strained international relations. For investors, this means potential volatility in markets, especially for companies reliant on international trade.

One effective strategy for Canadian investors is diversification. By spreading investments across various sectors and asset classes, one can mitigate risks associated with specific industries affected by tariffs. For instance, considering both U.S. and Canadian stocks, particularly in sectors less affected by tariffs, can provide a buffer against trade disruptions.

Furthermore, investing in commodities like gold or oil can offer protection, as these assets often perform well during economic uncertainty. Analysts have advised investors to consider commodities like gold and oil to protect against potential market disruptions due to tariff escalation under Trump’s policies.

Tariffs of 25% on Mexico and Canada, and 10% on China could further push gold prices up. In January, gold appreciated over 7%, showing strong investor interest in hedges against economic uncertainties. Oil, while less performant with slight gains in January, is seen as another protective asset due to geopolitical supply concerns.

Stocks to consider

Another approach is to focus on companies with a strong domestic presence, as they are less exposed to international trade risks. So let’s look at some TSX-listed companies that have a strong domestic presence.

Metro (TSX:MRU) is a leading food retailer operating in Quebec and Ontario. Its extensive network of grocery stores caters primarily to Canadian consumers, making it less susceptible to international trade disputes. In the first quarter of Fiscal 2025, Metro reported sales of $5.1 billion, a 2.9% increase from the same period in 2024. Net earnings were $259.5 million, up 13.6%, with fully diluted net earnings per share at $1.16, an increase of 17.2% compared to the previous year.

Hydro One (TSX:H) is Ontario’s largest electricity transmission and distribution provider. Its operations are entirely within the province, insulating it from international trade issues. In the fourth quarter of 2024, Hydro One reported net income attributable to common shareholders of $200 million, up from $181 million in the same period of 2023. This resulted in earnings per share of $0.33, compared to $0.30 in the prior year.

Canadian Apartment Properties REIT (TSX:CAR.UN) owns a diverse portfolio of residential rental properties across Canada. The demand for rental housing is primarily driven by domestic factors, making it less vulnerable to international trade tensions. As of its latest financial data, CAR.UN reported a profit margin of 26.3% and revenues totaling $1.1 billion, reflecting stable operations within Canada.

Bottom line

In conclusion, while tariffs introduce a layer of uncertainty, Canadian investors have tools at their disposal to safeguard their portfolios. In fact, there are even stocks such as the ones noted here that offer protection thanks to a strong domestic presence, and clear growth in their sectors. And another thing each offers? Dividends. So, by diversifying investments, focusing on domestically oriented companies, and seeking professional guidance, investors can navigate the challenges posed by trade tensions. And continue to work towards their financial objectives.